A Tim Hortons coffee shop in Newfoundland’s largest hospital has plenty of customers, yet managed to lose hundreds of thousands of dollars last year.

By:Anita Li and Richard J. BrennanStaff Reporters, Published on Wed May 30 2012

A Tim Hortons coffee shop in Newfoundland’s largest hospital has no shortage of customers, yet managed to lose hundreds of thousands of dollars last year.

Located in St. John’s Health Sciences Centre, the Tim Hortons outlet lost $260,000. It’s the fourth fiscal year in a row that the franchise has seen red, according to hospital documents. From 2008 to 2009, it bled nearly $300,000.

After the recent loss, Eastern Health, Newfoundland’s largest integrated health organization, decided to turn over the shop’s operations to the private sector. It’s a way to channel funds where they’re needed most, president and CEO Vickie Kaminski said in a news conference Tuesday.

“We’re going to have to shift dollars from inefficient areas into our strategic priorities to begin to meet unmet health-care needs.”

Spokesperson Zelda Burt said the hospital coffee shop was paying its staff higher wages than other Tim Hortons employees would typically receive.

“They charge you $1.94 for a large coffee, but the situation was that staff who were pouring that coffee were Eastern Health staff. They were actually getting paid $28 an hour.”

Burt added that the direct wages are around $20 an hour. Benefits and employer costs account for the difference. “That’s where you’re looking at the loss.”

An industry source told the Star that paying those kinds of wages, instead of minimum wage, would devour what little profit margin there is.

The Tim Hortons outlet was already privately managed, but now a private operator will also take care of its employees.

After opening in 1995, there was an expectation that the shop would earn enough profit to pay for the salaries of several nurses, CBC reported.

The coffee shop’s move to the private sector is part of Eastern Health’s overall plan to return to a balanced budget. The organization will shed 550 “full-time equivalent positions” to save $43 million.

Burt emphasized that there would be no layoffs of permanent employees, and no reduction of Eastern Health services or programs.

Tim Hortons refused to comment when reached by the Star.

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